Relative of Directors-urgent

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CS Vandana Kacholia (Querist)
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27 July 2009 1)A private company can accepts loan from relative of directors but what when that relative is also an employee of the company?

2)we have to make them shareholders by transfering shares from directors to them:

(a) so transfer of shares would be from the date when company takes loan from relative of director?

(b) can shares be again transferred to directors when still that relative's loan exist and even he is in employment also??

Thanks & Regards
Vandana Kacholia

Ankur Garg

Ankur Garg (Expert)
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27 July 2009 Hi,

As per my understanding of Deposit Rules, 1975 still you can claim exemption given under the said rules even if relative of directors is also an employee of the company.

So there is no need to follow the long path of transfer of shares and no need to make him shareholder of such Pvt. Company.

To conclude I would say your private company can accepts loan from such relative of directors even if he is employee of the company. You may go ahead.

Best Regards

CS Vandana Kacholia

CS Vandana Kacholia (Querist)
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27 July 2009 Thanks But i am still confuse bcz we cannot accept loans from employees as it will be termed as deposit and we can accept loan from relative of directors as its exempt so being a employee of company can we take loan from relative of directors??

A loan from employee would be acceptable only when he is also a shareholder i.e. an employee can be shareholder cum investors also

Plz Suggest!!

Regards
Vandana

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Ankur Garg

Ankur Garg (Expert)
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27 July 2009 As per my earlier reply exemption is still available because once a relative is always a relative and his status is not lost.

However if you are not sure then you may go for transfer of shares.

Transfer of shares should be prior to the date when company takes loan from relative of director.

Later on you may again transfer the shares to the director.

Regards

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CS Vandana Kacholia

CS Vandana Kacholia (Querist)
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28 July 2009 Thanks again.

According to deposit Rules, 1975 director or relative of director or member from whom money is received will furnish a declaration in writing to the company so is there any specific format of this declaration or else can you suggest something??

Thanks & Regards
Vandana Kacholia